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Money Habits

Yesterday I observed a somewhat curious thing. My 12 year old son keeps a spending journal. What’s odd is that I also have a habit of tracking every penny I spend. I don’t recall ever discussing this practice with him. I think he came up with the idea on his own. Which makes him a little nerd like his mom. Cool!

Here’s a picture of his spending journal. He keeps track of his income as well.

Keeping a spending diary has shown to reduce your spending the same way a food diary decreases eating. Because journaling about an activity increases mindfulness, you’re more aware of your habits and therefore make more thoughtful choices.

I recently read an excellent book. It’s ancient really, a best-selling classic in the area of personal finance,and I don’t know why it took me so long to get around to reading it. It’s called The Richest Man In Babylon. One of the money principles that’s underscored in the book is that of saving before spending, of paying yourself first.

It’s been said that money is for managing, not for spending. It’s easy to think of money that comes our way in terms of how we’re going to spend it. But really, we do better for ourselves when we think of how our money should be managed.

Why shouldn’t we, our long-term interests, be put at the forefront, before the creditor or whomever? And yet it’s not easy to get into this good habit of setting aside savings when we have money in our account. That’s why I’m a huge fan of automatic transfers. I have several of those set up in my account, so I don’t “feel” the money coming out, it just does. And it’s encouraging to see the balances of my savings accounts grow.

Budgeting is another good money habit. My husband and I do budget meetings at least once a month, sometimes more. We discuss expenses that are coming up. We tally up our spending for the prior period. We look at the dwindling balances on his debts. It’s been a good tool to help us communicate about money, but also about life and our dreams and goals.

Of course, these good habits can be derailed by bad habits! One of my pet peeves is people who don’t think it’s necessary to balance their checkbook. So often these people end up paying lots of overdraft charges when they inevitably bounce checks. Even if you have enough wiggle room in your checking account to cover discrepancies in your own figuring, it’s not a good idea to keep a mental account. (Do we even call it “balancing a checkbook” anymore now that most of us use debit cards or pay bills online almost exclusively? Perhaps it’s better to call it “reconciling your bank statement”.)

Paying bills late out of sheer procrastination is another bad money habit. It’s stupid tax. I’m also a fan of automatic bill pay for this reason.

What are some good money habits that have made a positive impact on your finances?